CNN reported that the damaging floods that have hit northeastern Australia and so far killed one person are having a broad knock on effect on the world’s coal and steel markets. Queensland, the province hit by the deluge, is one of the world''s largest suppliers of coking coal, a crucial element for the steelmaking industry.
In the wake of the floods, Rio Tinto, BHP Billiton, Anglo American and other miners have declared force majored, a clause used if the companies can’t meet their contractual obligations due to an act of God.
The Australian newspaper cites a Macquarie Group report saying that the floods could trigger a worldwide shortage of steel. Spot price for coking coal, now around USD 246 a tonne, is heading toward USD 300 a tonne.
Mr Shane Oliver chief economist at AMP told the Herald Sun that the floods could wipe away 0.5% of the nation''s GDP due to disruptions to the coal, sugar and wheat production.
Cost of the floods to the economy is currently estimated at AUD 6 billion, but that could change flood waters aren''t expected to peak until later this week.